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Real estate slowdown is coming home across area

Troubles in the market are acutely felt as home inventories rise, prices fall and expectations sink.

By CHUIN-WEI YAP
Published April 16, 2007

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Julius Green and Dennis Lester could not be more different.

Green, 39, is a real estate appraiser. He used to live in Seminole Heights in Tampa. He and his wife, Leah, have a 2-year-old son.

Lester, 54, owns what could be the last dairy farm in Pasco County. He's got 500 cows, a posse of Labradors and a big, rambling house just off U.S. 41 in northern Land O'Lakes.

But in the face of an imploding property market, both men have something in common: they are finding themselves with more space than they might need.

"On our street, we are the only house that's complete," Green said.

He just closed on his new home in Deerfield Lakes, a 230-home development on State Road 52 at the Suncoast Parkway. Just over a year ago, his 6-month-old neighborhood would have been crawling with builders.

It's empty today. Of the 30 houses built in the development, his section has just three.

Lester had a multimillion-dollar contract to sell his 296-acre dairy farm.

He got a nasty gift two days before Christmas, when Greenwood Property Development LLC decided the market wasn't worth the risk and killed the contract.

"I was this close to retiring," he said, holding up his thumb and forefinger.

* * *

Inventories are bulging.

Contracts are collapsing.

A new vocabulary is emerging in the real estate market. Welcome to terms like "short sale," which means a seller getting less from his home sale than what he owes in loans; and "home staging," which means the art of dressing up a home to look model-pretty just so a buyer might take a second look at it.

This time last year in Pasco, there were 5,011 homes waiting to move off the shelf. Today, there are 7,796, according to Home Discovery, a real estate company.

Sales are down and the glut of unsold homes is up, defying the optimists who said the market would turn around by spring 2007.

Two years ago, one in two homes sold in any given month. Today, the same period would see one in 20 sell.

"The inventory has to clear up before the market can go up," said Alex Mourtakos, president of Southern Image Homes, which has projects across the Tampa Bay area. "At this point, if we build one house a month, I'd be happy."

Mourtakos has more or less frozen three ongoing developments in Pasco County, which actually issued 250 single-family housing permits in March - up from 127 in January.

But don't let the spike fool you. It happens every year.

"It's people coming off the holidays," said Heidi Tuttle-Beisner, president of the West Pasco Board of Realtors.

Overall, the permit figures represent a new low for Pasco. Last year, the county issued 531 permits in January, 548 in February and 791 in March.

"2007 is going to be flat," said County Commissioner Ted Schrader, himself a landowner who sold to developers. "2008 is probably going to be flat, at least in the early part."

"It's going to be 12 to 18 months before we see things levelized and normalized," said Richard Heruska, chief operating officer of Home Discovery.

Prices dropping

Prices are still coming down.

Take Meadow Pointe in Wesley Chapel. At 28703 Crooked Stick Court, the selling price has gone from $389,900 in May last year to $335,000 in February.

Or 28418 Great Bend Place, also in Meadow Pointe, which was $419,900 in March last year. Now it's for sale for $335,000.

In Land O'Lakes' Concord Station, 18456 Merseyside Loop was for sale for $294,900 in September. Six months later, the price is down $20,000.

Russ Perlowski, a real estate agent, now advises potential clients to "home stage" if they are serious about selling. Home staging has become a new cottage industry surging into the void of the downturn, he said.

"If you are trying to do it by just sticking a 'For Sale By Owner' sign outside, forget about it," he said.

Perlowski also said he is seeing more short sales. So is Christie Zimmer, who runs F.R.O.G. Realty in Land O'Lakes.

"There's been a 10 to 15 percent increase in the last year," she said, though she says this is a rough estimate. "That number is going to go up substantially. I just did six in the last three months."

Still, short sales are a way out for desperate sellers who want to avoid having their homes seized.

"Foreclosures have more than doubled," said Linda Pichler, vice president of business development for Consumer Credit Counseling Service of Central Florida.

Looking ahead

Julius Green expects construction around his new home at Deerfield Lakes to go on for another two years or so before the development fills out.

"That's slow from a historical perspective," Heruska said.

In 2005, builders could not find enough lots to build on, Schrader said.

"Three years ago, we couldn't have afforded this house," Green said, of his 1,600-square-foot purchase.

A year ago, Lester, the dairy farmer, couldn't stop developers who knocked on his door with offer after offer. New development was bumping up so close to his farm that it was scaring his cows, he said.

Now, he's thinking of just going back to milking. The development experiment has disillusioned him.